Integrating pricing and capacity decisions in car rental: A matheuristic approach

Pricing and capacity decisions in car rental companies are characterized by high flexibility and interdependence. When planning a selling season, tackling these two types of decisions in an integrated way has a significant impact. This paper tackles the integration of capacity and pricing problems for car rental companies. These problems include decisions on fleet size and mix, acquisitions and removals, fleet deployment and repositioning, as well as pricing strategies for the different rental requests. A novel mathematical model is proposed, which considers the specific dynamics of rentals on the relationship between inventory and pricing as well as realistic requirements from the flexible car rental business, such as upgrades. Moreover, a solution procedure that is able to solve real-sized instances within a reasonable time frame is developed. The solution procedure is a matheuristic based on the decomposition of the model, guided by a biased random-key genetic algorithm (BRKGA) boosted by heuristically generated initial solutions. The positive impact on profit, of integrating capacity and pricing decisions versus a hierarchical/sequential approach, is validated.